Public Policy

ANY ANTIPOVERTY PROGRAM requires public policies to protect the aged, young, sick, and unfortunate. Low income, lack of healthcare, inadequate nutrition, substandard education, and inadequate housing or homelessness require effective public policy measures and adequate public expenditures. As programs for reduction of income inequality, public goods and services are general antipoverty programs most commonly found in the industrialized world. On the other hand, poor countries need first to adopt growth policies that are effective in reducing poverty. In the latter case, both macro and micro measures are necessary for an effective fight against poverty.

Worldwide, antipoverty programs focus on both micro- (sectoral) and macropolicies in the fight against poverty. Monetary policy should aim at ensuring growth and protect the real value of wages by focusing on inflation, interest rates, and exchange rates. Fiscal policy should focus on allocating adequate funds for the development of human capital and infrastructure, and protection of property rights to encourage private investment. It should also focus on the level of national debt and overall policies that promote both growth and more equal distribution of income for the bottom one-fifth of the income quintile.

In the United States, although the poor are persons of all ages, races, religions, and ethnic backgrounds, poverty is more commonly found along the lines of race, gender, and ethnicity. Since the 1930s, many federal and state programs and policies have been adopted to protect these groups. Fifty-three percent of all the federal expenditures go to income security programs. The programs include Social Security, Medicare, veteran and other retirement programs, and unemployment insurance. Temporary Aid to Needy Families, Supplemental Social Insurance, Food Stamp, Medicaid, Head Start, childcare and development funds, housing assistance and special programs for employment incentives are among the antipoverty programs the federal government provides to assist the poor.

Despite these efforts, the United States has the largest population of poor among the 27 Organization for Economic Cooperation and Development (OECD) countries. Comparison of the Gini coefficients (a basic measure of concentration of income that shows the share of income by population quintiles) for 2000 indicates that the United States has the fourth largest concentration of disposable income among the top quintile of its population, after Mexico, Turkey, and Poland. [Page 882]According to a survey of the OECD countries, in the United States public opinion is not in favor of government action to reduce income inequality. The OECD computations show that from the mid-1970s to mid1980s, the United States had a moderate increase in income inequality, as it did from the mid-1980s to mid-1990s, along with six European countries; and from the mid-1990s to 2000, it remained constant for the United States and nine European countries.

In the United States the income share of the top one percent of the population grew substantially after 1980, and it reached 34 percent of the top 10 percent during 1986–97. The United Kingdom and Canada both fell well below these levels during this time. France not only fell below all these countries in these years; it even experienced a decline in concentration at the top from 1988 on.

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